What Must a Monopoly, Such as a Public Utility, Account

question 196

Multiple Choice

What must a monopoly, such as a public utility, account for when setting its prices?

• A) A monopoly, because it has no competitors, can set prices as high as it likes.
• B) A monopoly must consider customer demand, and then set prices at the most profitable level.
• C) A monopoly must take into account what its top competitors are charging for the same product or service.
• D) A monopoly has no say in what prices it will charge because the government sets the prices for all monopolistic industries.
• E) A monopoly must look at the importance of each client, and then determine what respective rate each will be charged.

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Definitions:

Debit

An entry on the left side of an account, indicating an increase in assets or expenses or a decrease in liabilities, equity, or income.

Salary Expense Account

An account that tracks the total amount paid to employees for services rendered during a specific period.

Credit Entries

Accounting entries that increase liabilities or decrease assets, typically reflecting incoming payments or the granting of credit to a customer.

Transactions

Financial activities or events that affect the financial position of the company.